Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

Question on price of crude

General discussions of the systemic, societal and civilisational effects of depletion.

Question on price of crude

Unread postby onlooker » Fri 13 Feb 2015, 12:09:11

Hi, I am not a regular poster on this forum I have been here on this website since 2005. My question is from my reading here I gathered that we reached a peak in light sweet crude back in 2005, from my understanding that is the most desired type of crude and the easiest to extract. So we have since increased effort to get at more difficult to access crude such as Tarsands. Yet that supply is it not very energy intensive to extract? My basic question though is considering that we are now in 2015 and considering that oil prices have recently fallen, when do you think that oil prices will once again skyrocket upward about what year?
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10957
Joined: Sun 10 Nov 2013, 13:49:04
Location: NY, USA

Re: Question on price of crude

Unread postby dinopello » Fri 13 Feb 2015, 12:23:04

Short answer is nobody knows. And, there are a lot of threads discussing this from various perspectives.

Personally, I think the factors are in place for a big surge in demand. While the US hasn't explicitly had an austerity policy, spending is way down and there is a backlog of projects and desire to spend. It's a great time to be building infrastructure because the price of materials, energy and labor is low (although most governments are not taking advantage I think). In the private sector there are mountains of cash stockpiled available for investment. People are tired of being malaisical and are ready to loosen up. When the desire and stockpiled capital gets released and turned into physical realizations, crude and other commodities will rise.

But, it is possible the exact opposite will happen. So, Diversify.
User avatar
dinopello
Light Sweet Crude
Light Sweet Crude
 
Posts: 6088
Joined: Fri 13 May 2005, 03:00:00
Location: The Urban Village

Re: Question on price of crude

Unread postby Pops » Fri 13 Feb 2015, 12:32:12

Prices can only skyrocket to the extent that consumers can pay. Once it "attempts" to go higher, consumers most price sensitive reduce their consumption. When demand falls so does price, until supply is balanced.

Not that that isn't bad enough, we've just experienced 4 years of average oil prices higher than at any other time since oil and the global economy arguably may be showing the strain. It is just that the earlier forecast of perennially skyhigh prices didn't take ability to pay into consideration.

Personally I'd expect prices to return to their former range fairly quickly - within the year or perhaps 2 years at most, since much of the newfound oil wells decline in production 50-60-70% in a year and the current price prevents new drilling from taking place.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
User avatar
Pops
Elite
Elite
 
Posts: 19746
Joined: Sat 03 Apr 2004, 04:00:00
Location: QuikSac for a 6-Pac

Re: Question on price of crude

Unread postby Pops » Fri 13 Feb 2015, 12:56:49

Oil tops $60 for first time in 2015,

Oil rose above $60 a barrel on Friday for the first time this year, bringing gains this week to almost 4 percent, supported by signs that deeper industry spending cuts may curb excess supply.

Also supporting oil, euro zone economic growth accelerated unexpectedly in the final quarter of 2014 as the bloc's largest member, Germany, expanded at more than twice the expected rate.

The price of Brent crude collapsed from $115 in June to $45.19, the lowest in almost six years, in January due to oversupply. Since January, mounting signs of lower industry spending have helped prices rally by more than 30 percent.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
User avatar
Pops
Elite
Elite
 
Posts: 19746
Joined: Sat 03 Apr 2004, 04:00:00
Location: QuikSac for a 6-Pac

Re: Question on price of crude

Unread postby ROCKMAN » Fri 13 Feb 2015, 13:24:30

Looker – “Yet that supply is it not very energy intensive to extract?” Yes…but all extraction requires a certain amount of energy. And the energy requirement will never be the determining factor it what gets produced. It will always be decided upon the economic analysis and the energy component of the extraction processes is much lower than most folks realize.

Consider the decrease in Eagle Ford Shale drilling we’re experiencing. The energy input for such efforts hasn’t changed so why less drilling? Easy answer: lower oil prices mean the lower return on investment doesn’t justify drilling as many wells as once envisioned. And in the case of the Canadian oil sands there’s one aspect of lower oil prices that actually benefits those operations. As much as 1/3 of the oil delivered from Alberta to US refineries is light oil (much of it imported from the US) that has to be mixed with the oil sands production in order to transport it. Consider a Canadian producer that has to buy 3 million bbls of light oil to ship his 6 million bbls of oil sands production. Last year he had to pay about $270 million for the light oil he had to mix with his production. Today it’s going to cost him $150 million. IOW while he’ll get a lower price for his 6 million bbls of production he’ll also spend $120 million less for the light oil he requires to transport it.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11397
Joined: Tue 27 May 2008, 03:00:00
Location: TEXAS

Re: Question on price of crude

Unread postby onlooker » Fri 13 Feb 2015, 13:54:33

Thanks for that primer. Rock. So the economic considerations outweigh right now EROI. Yet if I understand will not EROI take precedence sometime in the future as extraction becomes more and more difficult and expensive? I mean like drilling wells deeper and deeper in the ocean and deeper underground on the land.
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10957
Joined: Sun 10 Nov 2013, 13:49:04
Location: NY, USA

Re: Question on price of crude

Unread postby sparky » Fri 13 Feb 2015, 14:39:53

.
The EROEI is the price , that's what pricing does
it capture all the cost in one single number , including the cost of doing business as taxes

that's why communism economics had so much trouble
....prices , especially of resources were arbitrarily fixed by the Gosplan and gave no indication of cost / value

the economic rationalism school of though hold that government services are not reflecting their real cost /benefit
it get tricky because it is very difficult to cost /benefit some welfare or lifestyle program .

As a rough indication of fossil fuel cost benefit , get a bit of the stuff and set it on fire , if it sustain combustion
it just might be worth exploiting , then consider the cost of extraction
User avatar
sparky
Intermediate Crude
Intermediate Crude
 
Posts: 3587
Joined: Mon 09 Apr 2007, 03:00:00
Location: Sydney , OZ

Re: Question on price of crude

Unread postby ROCKMAN » Fri 13 Feb 2015, 23:53:55

Looker - "Yet if I understand will not EROI take precedence sometime in the future as extraction becomes more and more difficult and expensive". You sort of answered your own question: "...as extraction becomes...more expensive." It's just a rough estimate but somewhere around an EROEI of 5 or 6 the $RO$I becomes negative. IOW on analysis a well might use the equivalent of 100,000 bo to produce 300,000 bo...a positive EROEI. But if the analysis shows the well will return only $.90 for every $1 invested it won't get drilled even though the EROEI indicates a net gain in energy. Of course, EROEI is related to well cost. But there is one fact that cannot be disputed: drilling decisions are made by oil company management and not economists. And no drilling decision has ever nor will ever be made on the basis of EROEI. In fact the vast majority of management couldn't tell you what that acronym stands for. Essentially it's a meaningless statistic to them.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11397
Joined: Tue 27 May 2008, 03:00:00
Location: TEXAS

Re: Question on price of crude

Unread postby ralfy » Thu 05 Mar 2015, 21:41:16

Related?

"The Price of Oil Is About to Blow a Hole in Corporate Accounting"

http://www.bloomberg.com/news/articles/ ... n-reserves
User avatar
ralfy
Light Sweet Crude
Light Sweet Crude
 
Posts: 5571
Joined: Sat 28 Mar 2009, 11:36:38
Location: The Wasteland

Re: Question on price of crude

Unread postby DesuMaiden » Fri 06 Mar 2015, 14:31:15

Pops wrote:Prices can only skyrocket to the extent that consumers can pay. Once it "attempts" to go higher, consumers most price sensitive reduce their consumption. When demand falls so does price, until supply is balanced.

When oil spiked to $147 dollars per barrel in 2008, demand was destroyed, and the price of oil dropped. But this is predicted by peak oil activists, like Michael Ruppert. Price goes up to the point it becomes unaffordable to most people. Demand is destroyed. And the price of oil goes down. But the moment consumption of oil starts to increase (after the price collapse), the price of oil goes up again, until it becomes unaffordable again. This cycle repeats itself for a while. And then the mortal blow to human industrial civilization will happen when the price of oil spikes again. And nobody can afford to buy that oil, and everything just shuts down.
Pops wrote:Personally I'd expect prices to return to their former range fairly quickly - within the year or perhaps 2 years at most, since much of the newfound oil wells decline in production 50-60-70% in a year and the current price prevents new drilling from taking place.

What do you mean by former range? Is that $80 to $110 dollars per barrel of oil? That's pretty high price of oil. But considering that there isn't that much oil left in the ground, it is not surprising that price will need to be that high to justify further production of oil.

Pretty much all of the oil on Earth has already been discovered. There is very little oil that hasn't been discovered yet. The decline of world oil production is eminent, if it isn't already happening. It doesn't matter if world oil production peaked last year, this year or ten years down the road. It will happen eventually, and when it does, the consequences will be catastrophic. I don't need to go into detail explaining the consequences of peak oil, because most people on this forum are already well aware of the economic crash and food shortages that will accompany peak oil.

Economic collapse and food shortages are a given because of how reliant we are on oil for everything ranging from commerce to food production and much more. I don't think most people alive today will survive for another 20 years, given the situation that lies ahead. In another 20 years, most people you know may be dead from the economic collapse and food shortages resulting from peak oil, and this is no exaggeration.
History repeats itself. Just everytime with different characters and players.
DesuMaiden
Tar Sands
Tar Sands
 
Posts: 886
Joined: Mon 06 Oct 2014, 16:00:31

Re: Question on price of crude

Unread postby onlooker » Fri 06 Mar 2015, 14:37:19

Yes Desu, most here are aware of the disastrous effects of lack of cheap oil. All you said here has been reiterated by others on other sites. It is both predictable and pretty much inevitable at this point given that we have not developed alternative energy sources to replace FF and that we have continued so reliant on cheap oil.
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10957
Joined: Sun 10 Nov 2013, 13:49:04
Location: NY, USA

Re: Question on price of crude

Unread postby DesuMaiden » Fri 06 Mar 2015, 18:11:41

onlooker wrote:Yes Desu, most here are aware of the disastrous effects of lack of cheap oil. All you said here has been reiterated by others on other sites. It is both predictable and pretty much inevitable at this point given that we have not developed alternative energy sources to replace FF and that we have continued so reliant on cheap oil.

Yeah, pretty much. The collapse is pretty much eminent, yet most of us are still blissfully unaware of the impending doom that lies a few mere years away :P :P :P

I don't care if the global economy collapses next year, five years from now, or twenty years from now. It will happen one day. It is not a matter of if. It is a matter of when. And when this collapse will happen is debatable. And the severity of this collapse is still debatable.

But what isn't debatable is that our current high-energy life styles is unsustainable. There is no way we can continue consuming like there is no tomorrow because there will be no tomorrow if we continue on the path we are going on. And we will keep on walking down this path until it is too late, unfortunately.

Maybe there might not be a die off of our population as bad as some people say. Maybe most people might still be alive after the oil age, but there is no way in hell we can keep consuming like we do right now. The Earth is finite, and we will eventually run out of everything extractable and useable. We are facing a peak everything crisis as Richard Heinberg and others once said.

But I still think a die-off scenario, where a significant portion of humanity perishes, is very plausible, if not inevitable. There isn't anything you do to prevent this collapse. The only thing you can do is prepare to survive it by whatever means necessary. If a significant portion of humanity must perish at the end of the oil age, then so be it. Just make sure you aren't a part of the significant portion that perishes. :-D :-D

That is easier said than done. You need a MAJOR change in your life style RIGHT NOW if you have any hopes of surviving the Collapse of Industrial Civilization (CoIC). But for most people, this change is too difficult to accomplish, even if they wanted change, because of social-political-economic barriers. Our government is quiet happy in maintaining status quo and will attack anyone who tries to change the way things are operating. The best thing you can do is organize local grassroots movements to adapt to the changes brought about by the CoIC.

Trust me. It will not happen overnight. But you will notice things become more and more expensive (since everything is made from or by oil, a higher price of oil means higher prices for everything). Jobs becoming harder and harder to find (since all jobs are ultimately dependent on oil, one way or another, as oil becomes scarcer and more expensive, jobs will become scarcer and pay less). And less and less cars on the road (as gasoline prices become too high). It is all gradual changes like that you will notice, year-after-year, until a total societal collapse happens. We are already noticing these things slowly creep into our society. So yes, we are slowly collapsing , yet most people are completely unaware of these changes.

Many people think these things are just a part of a regular economic downturn, but what they fail to realize is that this tread towards collapse has been consistent during the past decade or so. So yes we are collapsing. Just wish you the best of luck in surviving this collapse.
History repeats itself. Just everytime with different characters and players.
DesuMaiden
Tar Sands
Tar Sands
 
Posts: 886
Joined: Mon 06 Oct 2014, 16:00:31

Re: Question on price of crude

Unread postby onlooker » Fri 06 Mar 2015, 18:55:38

thank you Desu, All your saying makes much sense to me. We also must remember that even as this peak-oil collapse is happening simultaneously we are also experiencing and will more so experience environmental collapse. I have in all my posts on this site been consistently pessimistic on our collective fate in terms of humanities ability to avoid this great collapse. However, I have a couple of times pointed out that their exists another possibility that does not depend wholly upon us. I have noticed no interest on this site in exploring this possibility or even entertaining it. So I will not discuss it. If anyone does wish to discuss this please do send me an email, I will respond. I wish you Desu the best truly as well as everyone here and may you all be able to maintain some peace of mind in these ominous times.
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10957
Joined: Sun 10 Nov 2013, 13:49:04
Location: NY, USA

Re: Question on price of crude

Unread postby sparky » Fri 06 Mar 2015, 19:34:24

.
The price of crude is cruising in the mid 50$/b a barrel range after lifting itself from the low 40$/b
the contraction in the industry is starting to bite the big boys R& D ,
it seems the Northern campaign of drilling in the Arctic is going to be a very poor thing .
User avatar
sparky
Intermediate Crude
Intermediate Crude
 
Posts: 3587
Joined: Mon 09 Apr 2007, 03:00:00
Location: Sydney , OZ

Re: Question on price of crude

Unread postby DesuMaiden » Fri 06 Mar 2015, 20:10:06

sparky wrote:.
The price of crude is cruising in the mid 50$/b a barrel range after lifting itself from the low 40$/b
the contraction in the industry is starting to bite the big boys R& D ,
it seems the Northern campaign of drilling in the Arctic is going to be a very poor thing .

Unless oil prices are much higher, there will be little incentive to drill in a place as inhospitable as the Arctic. But then again, once oil prices go much higher, then there isn't any economy left to produce oil with! So you face a death prong issue. Not enough oil to produce anymore oil to keep the economy afloat. Plus, it takes enormous amounts of energy (mostly in the form of oil) to even think of developing alternatives to oil. So we are unlikely to develop alternatives to oil that actually work before petrochemical civilization collapses.
History repeats itself. Just everytime with different characters and players.
DesuMaiden
Tar Sands
Tar Sands
 
Posts: 886
Joined: Mon 06 Oct 2014, 16:00:31

Re: Question on price of crude

Unread postby onlooker » Fri 06 Mar 2015, 20:12:33

ditto Desu
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10957
Joined: Sun 10 Nov 2013, 13:49:04
Location: NY, USA

Re: Question on price of crude

Unread postby DesuMaiden » Fri 06 Mar 2015, 20:22:32

onlooker wrote:ditto Desu

What do you mean by "ditto"?
History repeats itself. Just everytime with different characters and players.
DesuMaiden
Tar Sands
Tar Sands
 
Posts: 886
Joined: Mon 06 Oct 2014, 16:00:31

Re: Question on price of crude

Unread postby onlooker » Fri 06 Mar 2015, 20:28:53

I mean I agree with what you say, it seems just too late to deal with the coming peak oil. Just wondering if you live outside US as maybe this word is mainly used in US
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10957
Joined: Sun 10 Nov 2013, 13:49:04
Location: NY, USA

Re: Question on price of crude

Unread postby DesuMaiden » Fri 06 Mar 2015, 20:35:28

onlooker wrote:I mean I agree with what you say, it seems just too late to deal with the coming peak oil. Just wondering if you live outside US as maybe this word is mainly used in US

I live in Canada, so that might be why I didn't understand what "ditto" meant.

Pretty much just preaching to the choir on this site with all of my "new" theories on economic collapse and food shortages resulting from peak oil LOL. Nothing I say is really that much of a surprise to most veterans on this site.

Peak oil = Collapse of Industrial Civilization (CoIC) along with other factors like population growth, resource depletion (of other resources) and climate change in summary.
History repeats itself. Just everytime with different characters and players.
DesuMaiden
Tar Sands
Tar Sands
 
Posts: 886
Joined: Mon 06 Oct 2014, 16:00:31

Re: Question on price of crude

Unread postby sparky » Fri 06 Mar 2015, 20:41:38

.
Peak oil is not, by itself ,going to crash modern civilization
it can be managed to a large degree
the big unknown is that problems don't come alone
a world financial system akin to a circus high wire act ,
economic competition following the end of two hundred years of West European supremacy ,
degradation of the Citizen /governance relationship
exhaustion of a wide range of resources
geo-politic brush fires in an increasing number of countries
a food situation at the mercy of a serie of disastrous harvests ( we are OK this year , so far )
an unknown black swan coming to visit

Any one of those can be dealt with , somehow , with a bit of police state and media massaging
if they come in bunch that could get a bit hairy
but don't worry , law and order will be maintained , the last people to loose their pay check will be the police
User avatar
sparky
Intermediate Crude
Intermediate Crude
 
Posts: 3587
Joined: Mon 09 Apr 2007, 03:00:00
Location: Sydney , OZ

Next

Return to Peak Oil Discussion

Who is online

Users browsing this forum: No registered users and 76 guests